Hedge Fund Kleinheinz Capital to Liquidate

Hedge fund Kleinheinz Capital Partners, which has roughly $2 billion in assets, told investors that it is shutting down.

NEW YORK -- Hedge fund Kleinheinz Capital
Partners, which has roughly $2 billion in assets, told investors
on Friday that it is shutting down.

"After over 20 years of managing hedge fund partnerships and
nearly 17 years since I started this firm, I have decided to
return our investors' capital," John Kleinheinz said in a letter
dated Nov. 30. A copy of the letter was obtained by Reuters.

Kleinheinz, who once described himself as a contrarian who
ran the value-oriented global investment strategy, wrote that
the Fort Worth, Texas-based firm had started closing out its
positions and plans to pay out substantially all of its capital
early in 2013.

A representative at the firm declined comment.

Over its lifetime, the fund has delivered strong returns,
but recently has had a tougher time.

Kleinheinz, in the letter, said the fund managed to generate
compound annual returns of over 21 percent. Last year, however,
the fund lost about 25 percent, and this year returns have been
flat through June, one investor who received the letter said.

Kleinheinz's decision comes at time a number of hedge fund
managers have faced tough market conditions and are considering
alternatives.

"My decision to return investor capital was based on the
fact that I am not enjoying running the Fund as much as I used
to and that managing a fund like ours requires me to do a lot of
things that make me a less effective investor," he wrote.

Kleinheinz said he now plans to be the lead investor in
colleague Mark Stupfel's new fund, which will launch during the
second quarter of 2013.

It wasn't all bad luck for the capital markets this week: Hedge funds had a decent first quarter despite a slowdown in jobs numbers, BlackRock might be heading into new territory as hedge fund managers take a hard look at their counterparties, and the head of the IMF didn't pull any punches when assessing today's global economy. At least we can admire the nice weather and some of the best quotes of the week.